Boring Portfolio

Boring Portfolio Report
Thursday, April 3, 1997
by Greg Markus (MF Boring)

ANN ARBOR, Mich. (April 3, 1997) -- The Boring Portfolio advanced for a second consecutive day, rising 0.22% in net value. Five holdings advanced while four declined.

Market averages were mixed. The Dow continued its week-long plunge, losing 40 points. The S&P 500 managed a fractional gain, however, and Nasdaq, helped by strength in networking stocks of all things and a surge of bargain hunting in the last half hour, scored a solid 1.02% increase.

Tomorrow at 8:30 AM Eastern time, the much-anticipated employment and wages statistics for the month of March will be released. If the numbers are good -- that is, if they reveal that Americans were employed and earning decent wages last month -- the market might well drop further yet, since such news could give the Fed an excuse to increase interest rates again in May.

On the other hand, if the numbers are bad -- that is, indicating rising unemployment and stagnant or even falling wages -- stocks could go up, and the badder the better.

Hey, don't blame me. I didn't invent this stuff. Perhaps we should all quit our jobs next week? Would that be good for stocks?

According to a Dow Jones story today, the median forecast of 25 economists surveyed by that news service is for a gain of 200,000 in March nonfarm payrolls. Economists also expect the unemployment rate to hold steady at 5.3% and average hourly earnings to creep up by 0.2%.

Those seemingly precise summary estimates conceal substantial disagreement among individual economists, however. In the survey, forecasts of gains in payrolls ranged from a low of 125,000 to a high of 300,000. Some economists expect March unemployment to be lower by as much a 0.2 percentage points as compared with February's 5.3% number while others think the opposite. Similarly, surveyed economists' estimates of the change in average hourly earnings spanned from minus 0.3% to plus 0.4% -- in other words, they were all over the map.

Meantime, Reuters reported that their survey of economists yielded summary forecasts of a 0.1 percentage-point drop in the unemployment rate and non-farm payrolls to rise by 182,000.

If it's possible to make any sense of all this -- and that may be asking too much -- it's probably fair to say that if nonfarm payrolls increase by no more than 200,000 or so and the unemployment rate stays flat, and the average wage shows no more than a small (0.1 percent?) tick up, that should calm traders, at least until some other shiny, moving object attracts their attention.

With that out of the way, let's recap Thursday's Boring stock activity.

Crude oil prices continued their recent decline, sending shares of oil-patch stocks lower. Although it held fast Wednesday, TIDEWATER (NYSE: TDW) slipped from its mooring today, drifting off to close at $44 7/8.

ATLAS AIR (Nasdaq: ATLS), CARLISLE COMPANIES (NYSE: CSL), and PRIME MEDICAL SERVICES (Nasdaq: PMSI) all fell fractionally. No news on any of them that I could find.

On the up-side, BORDERS GROUP (NYSE: BGP) continued higher following its selection Wednesday as Merrill Lynch's "Focus One Stock of the Week." BGP tacked $1/8 onto yesterday's $1 1/4 gain.

As noted above, technology stocks were one of the few bright spots in Thursday's trading. CISCO SYSTEMS (Nasdaq: CSCO) gained a dollar to close at a bid of $48 3/8 and ORACLE CORP. (Nasdaq: ORCL) rose $1 3/4 to close at a bid of $38 1/2.

OXFORD HEALTH PLANS (Nasdaq: OXHP) was also among today's winners, rising $1 3/4 to $57 7/8 (bid). At its upcoming annual shareholders meeting, Oxford's board of directors will ask shareholders to approve a proposal to double the company's common stock authorization, to 400 million shares.

Oxford's board considers the proposed increase desirable because it would provide the necessary flexibility for any subsequent stock splits, acquisitions, or other general corporate purposes. Oxford execs have indicated recently that the company would very likely announce its entry into a new geographical market area soon, possibly through an acquisition.

Shares of GREEN TREE FINANCIAL (NYSE: GNT) finally rebounded, gaining $1/2 on above-average volume. The stock has taken a thrashing recently amidst continuing concerns about rising interest rates, consumer creditworthiness, and slowing sales of manufactured homes.

I spoke with the company earlier today and was informed that, if anything, recent changes in the interest-rate yield curve have reduced Green Tree's costs of financing. The company also reiterated its record of achieving impressive earnings growth through all kinds of macroeconomic ups and downs in past years.

Green Tree reports its first-quarter results on April 17, in the morning. As we did all last year, The Motley Fool will participate in the follow-up conference call and will offer our summary of that conversation promptly.

(c) Copyright 1997, The Motley Fool. All rights reserved. This material is for personal use only. Republication and redissemination, including posting to news groups, is expressly prohibited without the prior written consent of The Motley Fool.

Stock  Change    Bid
ATLS  -  3/8   25.50
BGP   +  1/8   20.13
CSL   -  1/8   29.25
CSCO  +1       48.38
GNT   +  3/8   32.38
ORCL  +1 3/4   38.50
OXHP  +1 5/8   57.88
PMSI  -  1/2   10.13
TDW   -1 1/2   44.88
                   Day   Month    Year  History
        BORING   +0.22%   0.02%  -4.63%   9.75%
        S&P:     +0.03%  -0.90%   1.29%  20.70%
        NASDAQ:  +1.06%  -0.65%  -5.99%  16.60%

    Rec'd   #  Security     In At       Now    Change
  2/28/96  400 Borders Gr    11.26     20.13    78.79%
  5/24/96  100 Oxford Hea    48.02     57.88    20.51%
  8/13/96  200 Carlisle C    26.32     29.25    11.11%
   3/5/97  150 Atlas Air     23.06     25.50    10.59%
   2/2/96  200 Green Tree    30.39     32.38     6.54%
   3/8/96  400 Prime Medi    10.07     10.13     0.56%
  6/26/96  100 Cisco Syst    53.90     48.38   -10.25%
 11/21/96  100 Oracle Cor    48.65     38.50   -20.86%
 12/23/96  100 Tidewater     46.52     44.88    -3.55%

    Rec'd   #  Security     In At     Value    Change
  2/28/96  400 Borders Gr  4502.49   8050.00  $3547.51
  5/24/96  100 Oxford Hea  4802.49   5787.50   $985.01
  8/13/96  200 Carlisle C  5264.99   5850.00   $585.01
   2/2/96  200 Green Tree  6077.49   6475.00   $397.51
   3/5/97  150 Atlas Air   3458.74   3825.00   $366.26
   3/8/96  400 Prime Medi  4027.49   4050.00    $22.51
  6/26/96  100 Cisco Syst  5389.99   4837.50  -$552.49
 11/21/96  100 Oracle Cor  4864.99   3850.00 -$1014.99
 12/23/96  100 Tidewater   4652.49   4487.50  -$164.99
                             CASH   $7660.41
                            TOTAL  $54872.91